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7-Business: Pennsylvania (USA) GE tobacco farmers, many Amish,facing uncertain future

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TITLE:  Pa. tobacco farmers, many Amish, facing uncertain future
SOURCE: Pocono Record, USA
DATE:   Feb 7, 2003

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Pa. tobacco farmers, many Amish, facing uncertain future

HARRISBURG (AP) - Farmers accustomed to getting a healthy $1.50 per pound
to grow genetically modified tobacco for a low-nicotine cigarette are
dealing with an uncertain future.

That's because Vector Tobacco Inc., the company that produces the low-
and nearly no-nicotine Quest cigarette, is considering putting on hold
for one year the three-year contract it has with farmers - many of them
members of the Amish and other Plain-sect communities. The contract
brought stability to Pennsylvania's tobacco market - mostly located in
Lancaster County - for two years.

Quest cigarettes have been on the market in seven states for a little
more than week, but the manufacturer has plenty of tobacco on hand after
two years of harvests, said Pam Haver, executive vice president of
TriLeaf Tobacco, which acts as Vector's agent with farmers.

"What they want to do is skip a year because they have a huge inventory,"
Haver said. "They're only launching in seven states instead of
nationwide, and they're a year behind."

Vector Tobacco stops short of marketing its Quest cigarettes as a smoking
cessation product - a claim that could draw the regulatory attention of
the Food and Drug Administration.

The cigarettes are, however, designed to allow smokers to cut back on
nicotine, the addictive element in tobacco. Vector's tobacco has been
genetically modified to produce only trace levels of nicotine.

Quest allows smokers to choose their nicotine content. Quest 1 has 17
percent less nicotine than an average light cigarette, the company said.
Quest 2 has 58 percent less nicotine, and Quest 3 is nearly nicotine-free.

Company spokeswoman Carrie Bloom issued a two-sentence statement in
response to queries.

"Production plans in Pennsylvania are not yet finalized," Bloom said. "We
expect to sum up plans in coming months as we gauge consumer acceptance
of the product."

Haver said the possible change by Vector leaves farmers in a "somewhat
difficult position, although the farmers have expressed to us that they
have had two very good years."

"They are very willing to go along with that because they want Quest to
be a long-term, long-range success," said Haver, whose company will be
laying off 10 to 12 employees for the year if Vector decides not to order
tobacco this year. "They're willing to go without growing for a year in
order to have those resources go into sales and marketing."

Farmers are hoping that sales take off as the new cigarettes begin to
sell in stores in New York, New Jersey, Ohio, Indiana, Illinois, Michigan
and Pennsylvania.

The product, which is made from tobacco grown in six states, made its
debut last week.

No early sales figures were yet available from the company, Bloom said.

"There's still a possibility if it does real well they will grow some
this year," said Jerry Winstead, president of TriLeaf Tobacco. "If not,
it will skip a year and come back next year."

Farmers had looked to the Vector contract as an alternative to the rock-
bottom prices that tobacco was fetching at auction in Pennsylvania. The
low prices had left some farms in peril of failure, Winstead said.

"They have had two fantastic years, financially getting their feet
settled on the ground and not losing their farms," Winstead said of the
farmers. "They're willing to bear with them for a year."

About 4,000 of the 5,000 acres of Vector tobacco was planted in
Pennsylvania, Bloom said. The other five states where the tobacco was
grown were Illinois, Iowa, Hawaii, Louisiana and Mississippi.

Vector Tobacco is a subsidiary of Vector Group Ltd., which also owns
Mebane, N.C.-based Liggett Groups Inc., maker of Eve, Jade and several
discount cigarette brands.

The company is spending $15 million on advertising for Quest in the seven

It also is funding research at Duke University on how Quest affects
smokers' nicotine intake and urge to smoke.